Practice Quiz

Case Interview Prep

Category - Accounting

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Gross profit will appear on all income statements. Is this true or false?
  1. True-gross profit is always noted on an income statement.
  2. False-gross profit is only noted on income statements with a single-step format.
  3. False-gross profit is only noted on income statements with a multiple-step format.
  4. False-gross profit is noted on balance sheets.
  5. False-gross profit is noted on statement of cash flows.
Explanation
Answer - C - This is false. Gross profits only appear on income statements that are prepared in the multiple-step format.

Key Takeaway: Single-step income statements have no subtotal; multiple-step income statements do have a subtotal and gross profit will be shown as Net Sales − COGS.
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